Reference no: EM132311730 , Length: word count : 3000

Group Assignment : Company Performance Analysis

Word limit -3,000 words

ASSIGNMENT SPECIFICATIONS

Assignment Tasks

This assignment task is a written report and analysis of the financial performance of one selected listed company on the ASX in order to provide financial and investment advice to a wealthy investor. This assignment requires your group to undertake a comprehensive examination of a firm's financial performance based on update financial statements of the selected company.

Background

You're a group of investment analysts who work for a large investment consulting firm based in Australia. There's one big institutional investor from overseas that is interested in investing in the Australian market. You've been asked to choose one listed company the industry you think will have the most promising future for investment in Australia, then evaluate the performance of that company. Finally make a recommendation through your Report to the investor whether and why they should or should not invest in the company.

Create your group's "business name" under which your group will be providing the financial advisory services. Choose one listed company that your group will investigate/analyse for the purposes of possible recommendation to your client.

Requirements

Obtain copies of Annual Reports including Income Statements, Balance Sheets, and Statement of Changes in Equity, Cash Flows Statements and Notes for three (3) financial year 2015-2016, 2016¬2017 and 2017-2018. Your group can download these documents from the suggested web site using the firm's code (example, BHP- for BHP Billiton Company, etc.). The assignment should cover the contents described in Part 1 to 7 bellows.

STAGES TO BE COMPLETED

1 Description of operation and comparative advantages of the selected company.

2 Identify and conduct a trend analysis with two groups of financial ratios, including profitability, and operating efficiency of the selected company.

3 Identify the marketable securities that are available in current assets of the company. Discuss using of these securities as an instrument for cash management by the company.

4 Perform a sensitivity analysis with data provided.

5 Identify and discuss the systemic risks and un-systemic risks that may affect performance of the selected company.

6 Calculate the dividend payout ratio and comment on the dividend policy of the chosen company through 3 years

7 Recommendation Letter

Final Submission of Complete Assignment on Blackboard

Assignment Structure and Details of Assignment Tasks

Assignment structure and assignment tasks should be as the following:

Abstract

(no more than 200 words)

I. Introduction

Briefly introduction of you work: the purpose of assignment, the selected company, your findings and structure of your assignment

(not more than 300 words)

II. Financial Analysis of selected company

2.1. Description of the company

Prepare a brief description of the selected company, outlining the core activities, the market(s) in

II. Financial Analysis of selected company

2.1. Description of the company

Prepare a brief description of the selected company, outlining the core activities, the market(s) in which they operate within and any factors in the company's history which you consider help present the pictures of your company. Identify and comment on their comparative advantages.

2.2. Calculation and analysis of selected performance ratios

Using financial data obtained from current financial statements of your selected companies for the past 3 years. Annual reports are accessible via company websites or ASX website. Your client requests a comprehensive analysis of two groups of financial ratios, including profitability and operating efficiency of the company. Choose the relevant financial ratios for your analysis to meet your client's requirement.

Do a research to explain the trend of financial ratios of the selected company through 3 years to your client. You need to provide charts and/or tables for analysis and justification.

2.3. Cash management analysis: Identify the marketable securities that are available in current assets of the company. Discuss using of these securities as an instrument for cash management by the company. Tips: try to do a little research about instruments of cash management to enrich your comments and analysis.

2.4. Perform a sensitivity analysis with data provided

Assume that your selected company is considering a potential project with a new product that is expected to sell for an average price of $20 per unit and the company expects it can sell 300 000 unit per year at this price for a period of 4 years. bunching this project will require purchase of a $2 000 000 equipment that has residual value in four years of $200 000 and adding $ 600 000 in working capital which is expected to be fully retrieved at the end of the project. Other information is available below:

Depreciation method: straight line Variable cost per unit: $12

Cash fixed costs per year $300 000 Discount rate: 10%

Tax Rate: 30%

Do an analysis with cash flows of the project to determine the sensitivity of the project NPV with the following changes in the value drivers and provide your results in (a) relevant tables:

Unit sales decrease by 10%

Price per unit decreases by 10%

Variable cost per unit increases 10%

Cash fixed cost per year increases by 10%

2.5. Identify and discuss the systemic risks and un-systemic risks that may affect performance of the selected company

Do a research about the systemic risks and un-systemic risks that may affect performance of the selected company. Tips: Notes to Financial Statement of a company often provide some information about the risks faced by the company.

2.6. Identify the dividend payout ratio and dividend policy

Identify the dividend payout ratios of the selected company through the 3 year time frame. Discuss what dividend policy of the management of the company appear to be implemented and how it is changing or kept constant through three years. Explain any reason related to that particular dividend policies.

III. Recommendation letter

Based on your analysis above, write a letter of recommendation to your client, providing an explanation as why you would like to include one of selected the companies in his/her investment portfolio. Please refer to the ratio results calculated earlier and any other trends or factors that you believe to be important.

IV. Conclusion Summarize the outcomes of your works (not more than 300 words)